Monopolies use their market power to
A)charge prices that equal minimum average total cost.
B)increase the quantity sold as they increase price.
C)charge a price that is higher than marginal cost.
D)dump excess supplies of their product on the market.

Question

Quizplus · Accepted Answer

Monopolies have the ability to set prices higher than their marginal cost because they have no competition. They have market power, which allows them to dictate prices to some extent without fear of losing market share. This leads to them charging a higher price and earning higher profits.

Monopolies Use Their Market Power to